HCI
HCI Group, Inc.
$185.73
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 31.6% below fair value
You pay
$185.73
Bear
$206.99
Fair
$271.67
Bull
$306.68
Bear
$206.99
+11.4%
ROTCE 20.0% → 2.70x TBV
Fair
$271.67
+46.3%
ROTCE 25.0% → 3.54x TBV
Bull
$306.68
+65.1%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
30.6%
9.9%
Key Value Driver
ROTCE (30.6%) vs. cost of equity (9.9%)
Implied Market Multiple
2.42x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$225.00
Divergence from AlphaVal
21%
Summary
With ROTCE of 30.6% vs. 9.9% cost of equity, fair P/TBV is 3.54x on $76.67 tangible book, implying $271.67 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly